Jul 5, 2011

Agriculture reforms will deepen the agrarian crisis.

The news that Prime Minister Manmohan Singh wants an annual agriculture survey from next year, similar to the pre-Budget Economic Survey, is perhaps aimed at kick-starting agricultural reforms. Agriculture had remained on the back burner ever since the Economic Reforms were unleashed in 1991, and has been literally crying for attention.

The Prime Minister's office, says a report in The Hindustan Times (Agriculture reform next on the menu?HT July 5, 2011) has called for an "analysis of policy issues, evaluation of schemes and their impact on farm economy." This is certainly a welcome step. But if what the Prime Minister told a select group of editors the other day is any indication, agriculture is in for still a worst crisis. Why I say so is because the word 'reform' only means more of privatisation. And privatisation in agriculture, especially for a country like India, would only acerbate the prevailing crisis by bringing in unsustainable technologies through inappropriate policy changes.

As per The Hindustan Times report: In case of retail, where a proposal to allow global chains to enter the Indian market is awaiting government decision, PM sought to push the case for allowing foreign investment arguing that it would help improve supply-chains and distribution of food supply. At the same time he tried to soothe swayed nerves of small traders who fear they might be out of business. "There is fear of small traders, but without breaking such institutional barriers, there is fear of food inflation. I am hoping we can make a beginning in these areas. These are some of the ideas that are uppermost in my mind," Singh said.

Although the Prime Minister did not mention the contentious term 'FDI in Retail' when he talked of allowing foreign investment to help improve supply chains thereby streamlining distribution of food supply, he actually implied that. I am aware that allowing FDI in Retail is uppermost in Prime Minister's mind and some news reports have indicated that an approval might come within a fortnight or so. As I have said earlier, that of course will be the beginning of the end of Indian agriculture.

Agriculture today is suffering from a terrible crisis resulting primarily from economic unviability and deepening unsustainablity. The tragedy of farm suicides and the growing economic distress is directly proportionate to the imposition of Green Revolution technology. It is true that farmers are burdened with mounting debt but what is not being realised is that the growing indebtedness is because farmers have been forced to buy technological inputs that have not only created the second-generation environmental impacts but also turned farming into a losing proposition.

From Green Revolution, India is fast moving towards what is popularly called Rainbow Revolution. All policies are being amended/designed to help facilitate the take over of small scale agriculture by corporates. Contract farming, future trading and FDI in food retail are some of the measures that can help agribusiness to take control over farming. And it is primarily to strengthen the control of agribusiness over agriculture that farmers are being pushed out of agriculture. The growing, often violent, conflicts over acquisition of land by the government on behalf of the companies only testifies the government's resolve to hand over agriculture to the industry.

Is this the way forward?

I don't think so. What India needs is a kind of agriculture that encourages production by the masses, and not for the masses. Displacing farmers, acquiring fertile land in the name of economic development, and allowing FDI in food retail are some measures that will destroy the very foundations of country's food security. Unfortunately, unlike corruption, the Supreme Court is not coming down heavily on the government's ineptness in handling agriculture. Somehow farming and agriculture has remained outside the thinking frame of the middle class. It is the least understood and the most exploited sector of the economy.

Reviving agriculture would therefore depend upon a right mix of public policies with appropriate action. Here is what I feel should be the approach to be adopted to truly reform agriculture:

The National agricultural policy (prepared by ICAR before 2000), mentions about the lack of economic viability in crop production and has blamed it on capital inadequacy, poor infrastructure support or demand side constraints. The grain agriculture mainly wheat production got itself involved in a western model of high input- high output; in the long run it didn’t prove sustainable. India’s investments on food grain production can be seen from facts below:

 India had 5000 tractors in 1950 (pre-plan); They have increased to 1,80, 000 some years ago and is fast touching 3 lakh figure now. Many tractors are under-utilised. A number of small farmers had been tempted by tractor loans and fallen to debts. We import petroleum products worth more than Rs. 30 to 35 thousand crores every year. A good share is used for agriculture. An increased OPA (oil pool account) this year will add to oil pool deficit Rs. 12,000 crores if world price does not soften * [*please also see box in page 25 on oil pool account of India] We had an installed capacity of 2000 MW electric power in 1950. Today it is 85,000 MW electricity; but nearly one third of it (30.54%) is used as subsidised power by land owners for agriculture.(not that it is regular and depndable) In some states it is even given free. A number of irrigation projects had been commissioned; but land had been irrigated without any rationale. For example, part of Haryana is currently facing the ills of stagnation of water, flooding and diseases in its once dry land. A more or less similar situation is emerging in parts of Punjab. It is not a mistake to plan irrigation for crop cultivation. But lesson learnt is, that there is need to reckon cropping pattern suitable for the soil type. A rationale for its use is as important as water itself.  In spite of the existence of a number of fertiliser factories we import fertiliser (worth Rs. 2400 to 4000 crore of Indian rupees per annum). In 1995-96 we have imported fertiliser worth Rs 4621 crores. The subsidy for fertiliser is reported to be shared more by the Indian fertiliser manufacturers than farmers. Imported fertiliser cost far less (available at nearly half the cost).  Agreeably a policy to import of food is not considered to be in the interest of the country, no matter how cheap the products would be. But-(a) the argument to disuade “ship to mouth policy” must also consider the implication of dependence on import of inputs like fertiliser, chemicals and petroleum products for producing food .(b) in all fairness to equity & justice, import of horticultural products, fruits, milk powder and edible oil must also be counted as forms of shipping to mouth**.(c) export of oil cakes (animal feed) affects factor productivity of dairy production.**[*Also please see page 25, the box on energy . ** see para on trends of global market on page 14] The government policy of absorbing part of cost of fertilisers and pesticides by subsidies at input stage and support price at output stage, virtually encourage the irrational use of these inputs and indifference to factor productivity. Though intensive agriculture helped increase the quantity, the nutritive value of grains so produced did not improve similarly. Deficient crops (and residues) affect the health and fertility of livestock vital for small holders’ earning for survival. Despite subsidies the high input has already escalated the price of food grains. 206 million tons of food grain production is meaningful if it is within the buying power of common man specially the 35% who live below poverty line or B.P.L. (ie. people who do not earn 3116/- per annum in urban and 2740/- in rural areas.) Empowering the masses specially the poorest & small holders is thus significant. The National agri. policy needs specific actions (plans) towards this.

About this blog

Think two decades back, think today, and think two decades ahead.Is this the direction the world should follow?

Why can't we make an effort to change the popular discourse, the mainline economic thinking that has only added to global problems?

This is what made me begin on a journey in search for the abandoned path to equity, justice and sustainability. My journey begins with the fundamentals -- food, agriculture and hunger.

My dream takes me to a vision beyond, in the spirit of gaia and towards a gross happiness index. I too have a dream. And I know we can together change this script. A long journey always begins with the first step. Come, join me.